Employment Creation Bill to Boost Infrastructure Project?

7 months ago . 3 min read
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Employment Creation Bill to Boost Infrastructure Project?
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By Eddy Leks

Infrastructure has been one of the important programs by the central government. It has also been determined officially as the second most prioritized program for the next five years, after the human resources development. Accordingly, one will expect to see the construction project to continue in the second term of Jokowi's presidency.

There are undoubtedly many regulations related to the infrastructure project for the public interest. Yet, one underlying law is particularly important, namely land procurement law of 2012. Through the employment creation bill, the government proposes some of its amendments.

To clear up the land status affected by the land procurement process, the government proposes to add additional provisions if the land falls within a specific category. For example, if the land is located in a forest territory, a waqf, or owned by the government or its business entities. If so, the land status will be changed according to its designated use during the time of location determination (penetapan lokasi or penlok).

Penlok is an important phrase. When it is issued, the entitled party may only transfer its land right to the institution requiring the land through the land agency. Furthermore, when the penlok determined, requirements on land use adjustment (new term under the bill), technical consideration, and analysis on environmental impact are no longer required. The value of compensation for the land right is also determined based on the date of the issued penlok.

Under the bill, for efficiency and effectiveness, the land procurement for the public interest that requires a land area of fewer than five hectares can be performed directly with the entitled party (i.e., land and/or building owner). This is not an entirely new provision, but the regulation is essential for legal certainty. For this matter, the mayor or regent can issue the penlok. But when the land is more than 5 hectares, the penlok is issued by the governor.

The bill also proposes amendments on the period of penlok, from two years plus a one-year extension to three years with a one-year extension. When the entitled party declines the compensation form or amount, the compensation will be deposited as consignation at the court. This consignation also applies if the entitled party domicile is unknown or if the land is being disputed, seized, or mortgaged by the bank. This bill stipulates that such consignation must be admitted no later than 14 business days. This is an extremely important provision under the law because, at the time of the consignation, it would mean that the relinquishment of land right (as the object of land procurement) declared as removed, its underlying evidence not applicable, and the land becomes directly possessed by the state.

There are not many proposed amendments to the current land procurement law. The government focuses more on the procedure to expedite the process and the completion of the land procurement. If it can be immediately completed, in an effective and efficient manner, the institution requiring the land (along with its business partner) can proceed with the construction.

Nevertheless, every land procurement project will be led by the local land institution (part of the National Land Office). Accordingly, to achieve the government's target, the local land office must clearly understand this law, general land laws (i.e., land ownership) and have a strong team to manage the process with enough staffs to support them since they will have to cover multitudes of landowners in a limited time. Therefore, despite the current law and this bill, infrastructure projects will only be implemented efficiently when the state has a strong land institution.


Eddy M. Leks is the managing partner of Leks & Co, a multi-services law firm based in Jakarta.

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